As European leaders make plans to increase the taxes that are levied on American corporations that offer services in the European Union, they may face a new problem. If the recent efforts by lawmakers and Trump administration materialize, these companies will see a global profit reduction as they will be taxed on all fronts. These cracks can be seen as Amazon has received a billing of $293 million from the European Union in uncollected tax. The money should be paid to Luxembourg on the argument that there was an illegal state subsidy that arose when the state failed to collect the tax. At the same time, the European Union has taken Ireland to court for failing to bill Apple for taxes worth $15.2 billion. According to a former Michigan Republican known as Dave Camp, the European Union is going after taxes that should have been paid in the United States. Dave Camp is remembered for his plans to do a tax overhaul plan that failed back in 2014. At one time, Mr. Camp served with the House Ways and Means Committee as the chairman. He recently said that the United States should address the issue before they are outwitted by their European counterparts.
However, the dispute between Amazon and Apple is as a result of a tactic used by many governments across the globe to lure giant corporations with tax havens. According to the Institute on Taxation and Economic Policy, this is the sole reason why 73 percent of the richest companies in the world have a subsidiary in one of these so-called low-tax havens. What has emerged is that the rivalry will fuel tensions between these nations and the United States government. There is also a possibility that the crackdown by the European officials would help the American efforts as the corporations are going to pay up to receive the US government backing. This means that efforts to milk more money from these American corporations will see the companies pay up to the Internal Revenue Service. At the moment, the Republicans want to adopt a new policy that allows for taxations of the profits that are earned in their jurisdiction rather than worldwide. This is a game that has been ongoing for some time that involves shifting copyrights and patents. These companies also shift royalties and profits to places with low tax rates. Example of tax havens in includes Bermuda and Cayman Islands.
